NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik 717-787-1381

Auditor General Jack Wagner Says Sale of State Office Building
In Downtown Pittsburgh Would be Bad Deal for Taxpayers

PITTSBURGH, March 2, 2009 -- Auditor General Jack Wagner today said that the commonwealth should postpone plans to sell the State Office Building here because of the weak economy.

“A financial transaction in these depressed market conditions amounts to a fire sale that is not in the best interest of taxpayers,” Wagner said in a letter sent to James Creedon, secretary of Pennsylvania's Department of General Services, which is trying to find a buyer for the historic 52-year-old structure, a signature building for state government in Western Pennsylvania.

DGS put the building, which houses 800 state employees, up for sale in April 2008. It had agreed to sell the building to the Buncher Co. for $4.5 million -- a price that Creedon, in a recent newspaper interview had acknowledged was less than the state had expected -- but the deal fell through when Buncher withdrew its bid in early February.

DGS has given prospective bidders until March 6 to match the state's minimum price of $4.5 million for the building; if no one does, DGS will then take it off the market until conditions improve, Creedon told the House Appropriations Committee last week. Wagner, in his letter to Creedon, recommended that the building be taken off the market immediately, before bids are opened on Friday.

“The fact that the Buncher Co. withdrew its bid of $4.5 million may say more about depressed state of the real-estate market than it does about the value of the State Office Building,” Wagner said, “But we won't know that for sure unless we wait for market conditions to improve.”

Wagner said there would not be enough profits from the sale to offset moving expenses or to pay for millions of dollars in new office leases that DGS would be signing at three new buildings in downtown Pittsburgh, requiring taxpayers to foot the bill.

“This is a bad deal for taxpayers,” Wagner said. “With the state facing multibillion-dollar deficits for the next few years, now is not the time to be saddling hard-working Pennsylvania residents with additional financial burdens they cannot afford.”

“In addition to being financially wasteful, it would be “ludicrous” to decentralize state offices in Pittsburgh while other government agencies are moving to centralize other functions in order to save money,” Wagner said. He noted that DGS itself recently touted efforts to centralize oversight of the commonwealth’s fleet of 16,000 state vehicles.

Wagner said that taking the State Office Building off the market would find DGS time to explore alternatives to a sale, such as whether federal stimulus funds might be available to rehabilitate the 16-story, 273,000-square-foot structure. Noting that Gov. Rendell attended a summit in Philadelphia last Friday to promote federal funds available for green jobs and green technology in Pennsylvania, Wagner said that the commonwealth could create new jobs by retrofitting the State Office Building to make it a showcase of green technology in Western Pennsylvania.

“It won't hurt state employees or taxpayers to remain in the State Office Building,” Wagner said. “If the State Office Building is sold today, the only certain winners are the buyer of the building and the leaseholders of the office space where state employees will be relocated.”

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits, and special investigations. The Department of the Auditor General conducts approximately 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s website at www.auditorgen.state.pa.us.

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